Ragnar Øygard

Development by washing machines

2011-03-23T14:53:00.000-07:00

Perhaps some people who matter actually want unclear property rights?

2010-05-27T15:39:00.000-07:00

Chris Blattman cites from a new book by Ato Onoma on the politics of property rights in Africa:

Muntari’s response was unsettling. He claimed that, after working with chiefs for seventeen years, he had come to the conclusion that chiefs did not want clear boundaries, functional property registers, and an environment devoid of disputes. He argued that the chiefs would sabotage any effort to provide these features. According to Muntari, in the absence of such mechanisms, cash-strapped, land-hungry chiefs could conveniently “mistakenly” allocate the lands of neighboring chiefs or sell land that their ancestors had sold earlier. Further, where tenants engaged in subversive political behavior, chiefs could conveniently award their rights to more loyal subjects…

Simply put, chiefs did not want property rights security.

The quote is from Ghana but sounds like something that could be true elsewhere too. It is a useful reminder that if we start with an assumption that everyone wants clarity, well defined property rights and no conflict, we may be naive. That may not be how local politics work.

Lomborg vs Krugman

2010-05-27T15:16:00.000-07:00

Bjorn Lomborg visited UMB today and gave a presentation. Probably much the same as his TED talk. Opponents were not given much time, so I thought I should link to his debate with Paul Krugman, who makes some very good points:

Lomborg vs. Krugman - Watch more Videos at Vodpod.

The "Secret" Copenhagen recordings:

2010-05-12T15:29:00.000-07:00

It was as we expected: China and India were key.

From the Climate Conference in Copenhagen in December 2009 - posted by Der Spiegel

Commented in The Guardian:

For anything substantial to happen, the leaders of China and India must be convinced that the costs of global warming will be high for their countries. And it will be.

Duflo vs. Acemoglu: Randomized social trials or general equilibrium?

2010-05-12T15:13:00.000-07:00

Esther Duflo gives a great talk on randomized experiments:

while Daron Acemoglu argues that more general equilibrium analysis and political economy is the way to go. The partial equilibrium results from randomized trials are often not valid when scaled up:

For example, it may be the case that in partial equilibrium estimation focusing on firm-level variation we found that firms with better access to credit expanded, but this was at the expense of other firms that did not have access to credit (that is, partly by stealing business from others).

And yet, the same response cannot take place in general equilibrium. As a consequence, when additional credit becomes available to a large fraction of firms, total output may not increase by as much or at all.

One could thus imagine a situation in which partial equilibrium estimates of relaxing credit constraints are large, while the general equilibrium effects would be small.

I think Chris Blattman has a good point (as usual) when he suggests that when everybody else is rushing toward randomized trials, the smart thing to do for a young graduate student is to run the other way: towards general equilibrium.

Aid priorities in fragile states

2010-04-26T13:09:00.000-07:00

Donors are setting themselves up to fail says Chris Blattman. His advice:

Set goals for the rate of bureaucratic improvement, not the level of standards.

Keep education and poverty on the table, but make certain that law and order are first not fourth on the agenda.

Finally, in place of direct aid, there’s a nice new trick: community-driven development.

Is decline in rainfall the cause of poor growth in Sub Saharan Africa?

2010-04-19T00:58:00.000-07:00

Yes, reduction in rainfall has contributed a large share of the gap in growth between Sub Saharan Africa and other developing countries of the world say Barrios, Bertinelli and Strobl in a new paper:

We examine the role of rainfall trends in poor growth performance of sub-Saharan African nations relative to other developing countries, using a new cross-country panel climatic data set in an empirical economic growth framework. Our results show that rainfall has been a significant determinant of poor economic growth for African nations but not for other countries. Depending on the benchmark measure of potential rainfall, we estimate that the direct impact under the scenario of no decline in rainfall would have resulted in a reduction of between around 15% and 40% of today's gap in African GDP per capita relative to the rest of the developing world.

Harald Eia interviews Charles Murray on Hjernevask

2010-04-12T16:07:00.000-07:00

Harald Eia gives space on his program tonight to Charles Murray (The Bell Curve), who claims racial differences in IQ and that they´re genetically given. The program never mentions what I think is a pretty strong counter argument: Mean IQ scores in population groups are changing much faster than what can be accounted for by genetic change. E.g. as described in Thomas Sowell on Race, Genes, and IQ: Vol. 28, American Spectator, 02-01-1995, pp 32: via Brad deLong:

The national averages have in fact changed by amounts that are comparable to the fifteen or so IQ points separating blacks and whites in America. To put it another way, on the average, whites today differ from whites, say, two generations ago as much as whites today differ from blacks today. Given their size and speed, the shifts in time necessarily have been due more to changes in the environment than to changes in the genes.

While this open presentation of evidence against the genetic basis of interracial IQ differences is admirable, the failure to draw the logical inference seems puzzling. Blacks today are just as racially different from whites of two generations ago as they are from whites today. Yet the data suggest that the number of questions that blacks answer correctly on IQ tests today is very similar to the number answered correctly by past generations of whites. If race A differs from race B in IQ, and two generations of race A differ from each other by the same amount, where is the logic in suggesting that the IQ differences are even partly racial?... It is a question of the validity of the conclusion that differences between genetically different groups are due to those genetic differences, whether in whole or in part. When any factor differs as much from Al to A2 as it does from A2 to B2, why should one conclude that this factor is due to the difference between A in general and B in general?...

James Heckman is also critical of the book by Herrnstein and Murray 1994 The Bell Curve:

The Book fails for five main reasons. 1. The central premise of this book is the empirically incorrect claim that a single factor - g or IQ - that explains linear correlations among test scores is primarily responsible for differences in individual performance in society at large.... There is much evidence that more than one factor -- as conventionally measured -- is required to explain conventional correlation matrices among test scores.... They do not emphasize how little of the variation in social outcomes is explained by AFQT or g. There is considerable room for factors other than their measure of ability to explain wages and other social outcomes. 2. In their empirical work, the authors assume that AFQT is a measure of immutable native intelligence. In fact, AFQT is an achievement test that can be manipulated by educational interventions. 3. The authors[']... implicit assumption of an immutable g that is all-powerful in determining social outcomes leads them to disregard a lot of evidence that a variety of relevant labor market and social skills can be improved. 4. The authors present no new evidence on the heritability of IQ or other socially productive characteristics.... [T]hey... [compare] IQ... [to] a crude measure of parental environmental influences. This comparison is misleading. It fails to recognize the crudity of their environmental measures and the environmental component that is built into their measure of IQ, which biases the evidence in favor of their position. Moreover, the comparison as they present it is intrinsically meaningless. 5. Finally, the authors' forecast of social trends is pure speculation... the social policy recommendations have an ad hoc flavor to them.... The appeal to Murray's version of communitarianism as a solution to the emerging problem of inequality among persons is a deus ex machina flight of fancy that is not credibly justified.

Renminbi Revaluation

2010-04-07T13:58:00.000-07:00

I gave my students in ECN320 an exercise in assessing the effects of a Renminbi revaluation. Paul Krugman weighs in on the topic.

Keynes vs Hayek

2010-04-07T13:46:00.000-07:00

Paul Krugman also has a comment on the Austrians

Perhaps all those boring papers are some use after all?

2010-04-06T15:05:00.000-07:00

Chris Blattman links to an interesting talk by Lant Pritchett

Shoes from Ethiopia

2010-04-06T14:39:00.000-07:00

some time back, Kei Otsuka told me about research he was doing on the shoe industry in Ethiopia. Now the research is out. An Ethiopian student commented today that this is a case of successful industrial policy. I must read more than the abstract!

1000 or more factories are producing leather shoes in Addis Ababa. Most of them employ only 10 workers or fewer, but several factories have hundreds of workers.

In the early 2000s, China-made leather shoes flooded into the Ethiopian market plunging the local industry into a slump. Remarkably, however, the industry soon resumed vigorous growth, not only taking the market back but even finding its way into the international market.

While the majority of Ethiopian factories sell their product to domestic markets, some are exporting shoes in bulk to Italy and other developed countries as well as neighboring African countries.

Time for some good music

2010-04-06T14:38:00.000-07:00